Read what you're saying. You shift the discussion from total in-pocket dollars to payroll tax. Sorry, but that doesn't fly. Payroll taxes are but one source of taxes paid under the current system that go away under the NRST, and which affect spendable income.
The entrepreneur paying himself out of corporate profits is paying himself out of money that has been taxed by the federal government at somewhere between 15% and 35% (USC 26.A.1.A.II.11.b.1). Under the FairTax, he would have at least 17.65% more money in his pocket than he would have under the income tax.
The investor pays between 15% and 25% taxes on capital gains (I think, that is... USC 26.A.1.A.I.1.h is pretty convoluted on the capital gains definition). For retirement savings, the vast majority of income drawn from that investment is capital gains, not principal. Again, we're talking about someone who will see 15% or more money in hand after the NRST enactment due to the elimination of federal income taxes.
Immaterial, and frankly, a mere assertion. You continue to avoid the fact that "these folks" also have a combined tax burden under the Income Tax regime of well under 10%.
No mere assertion. A couple with an income of $25k gets an FCA of $4,508 (23% of $19,600). If they spent their entire $25k income on taxable goods and services, their effective tax rate would be 4.97% (total taxes of $5,750, minus FCA of $4,508 for a net tax total of $1,242, divided by $25K spent equals .0497).
If they spent their FCA as well, bringing their spending total to $29,508, the effective tax rate becomes 9.12%.
The lower the income, the lower the effective NRST rate would be, again, assuming the entire income is spent on taxable goods and services.
Money in a 401K is subject to ordinary income tax when withdrawn. Most of it is pre-tax contributions, some is actual capital gain. None of it has been taxed. I don't think the politicians will allow that pot of gold to remain untouched. The forced distributions at age 59 1/2 are evidence of that policy. Fortunately for most people, their annual income and tax brackets are much lower by the time the forced withdrawals begin. They pay less tax than if the withdrawals were lumped on top of an active employment income. Of course this assumes you are actually unemployed at the time the forced withdrawals start. I hardly expect to be retired before about age 70, so my 401k is going to get nailed pretty hard.
Savings accounts are mostly filled with principal from after tax income. It's pretty easy to discern the principal vs capital gain elements. Those savings are going to be double taxed. Savings account rates have been very low for the past 10 years. It's going to be mostly principal and whacked severely in value by NRST.
I did nothing of the sort. I quantified the magnitude of taxpayers who would receive little to no benefit from the repeal of payroll and income taxation. Payroll taxes represent the majority of taxes for low to moderate income taxpayers.
The entrepreneur paying himself out of corporate profits is paying himself out of money that has been taxed by the federal government at somewhere between 15% and 35%
Your source notwithstanding, your assertion is incorrect. The vast majority of small business owners are not corporate entities subject to your citation. They are proprietorships, partnerships and S-corps that pay individual income tax on distributed profits and NO payroll tax. As such they pay anywhere from a negative tax rate (if recapturing prior losses) to a top rate of 35%. Within that range are indeed individuals who will have little to no additional available income from the repeal of the current tax code ... in fact, some will experience a net LOSS of spendable income from the inability to recover prior losses.
For retirement savings, the vast majority of income drawn from that investment is capital gains, not principal.
Well that is truly an unsubstianted assertion if I ever saw one. Retirees live from government transfer payments, previously taxed savings and investment, pensions (subject to income tax but not payroll tax) and, principally from living frugally. Yes, capital gains do indeed contribute to the retirement pot, but a substantial portion, perhaps even a significant majority of capital gains are tax exempt: home ownership gains.
You continue to evade the point: there exists a substantial portion of the population who will NOT see sufficient increases in spendable income to offset inflated FairTax prices.
No mere assertion. A couple with an income of $25k gets an FCA of $4,508 (23% of $19,600). If they spent their entire $25k income on taxable goods and services, their effective tax rate would be 4.97% (total taxes of $5,750, minus FCA of $4,508 for a net tax total of $1,242, divided by $25K spent equals .0497).
If they spent their FCA as well, bringing their spending total to $29,508, the effective tax rate becomes 9.12%.
There you go with anecdotes again ... useless since I'll just give you a counterexample. But before I do, note a couple of problems:
You also failed to compare that to the Couple's current tax situation (I can guess why :-)... but I'll take care of that below.
If she spent her FCA as well, bringing her spending total to $27,254, the effective tax rate becomes 16.06%.
Under the income tax, this Single paid $0 in payroll taxes and $1,000 in income taxes for an effective tax rate of 4%. Clearly she is at a significant disadvantage under the FairTax.
